“I thank Auditor General DePasquale for conducting a complete performance audit of now both of Pennsylvania’s largest pension boards. His report reflects my fundamental concern: SERS has historically paid a substantial amount in high Wall Street fees on investments that are underperforming. Like the Auditor General, I commend recent steps SERS has taken to reduce fees while urging the system to accelerate and intensify those efforts.”

Pennsylvania Treasurer, Joe Torsella

As presented in the Auditor General’s audit, SERS paid $167 million on an annual basis to high-priced Wall Street money managers for an investment strategy that returned 6.5% in the most recent fiscal year— well below the median national return for large pension funds during the same period of 12.4%, and below the 7.25% long-term expected rate of return set by SERS.

“Simply put, we are paying too much while underperforming. I echo the Auditor General’s call for SERS to become a national leader in full fee transparency, and to build on recent improvements to lower Wall Street fees. If we simply lower SERS’ fees to the national average paid by comparable funds, we will keep more money in the hands of Pennsylvania retirees and taxpayers.”

Pennsylvania Treasurer, Joe Torsella

In April, Governor Wolf and Treasurer Torsella sent a joint letter to the boards of SERS and PSERS to encourage them to reduce investment costs over three years and implement administrative efficiencies.

Treasury has already taken the lead on lower-cost investing. Treasurer Torsella announced in April that he will transition all of Treasury’s $2.4 billion public equity investment holdings to a passive investment strategy, saving an estimated $5 million per year in fees (approximately $195 million in total savings when compounded over 20 years).